Joaquín Almunia: ‘Spain is playing with fire’

MADRID — Joaquín Almunia doesn’t trust far-left Podemos to run Spain, even as the former European commissioner blames his own Socialist Workers’ Party (PSOE) and Mariano Rajoy’s conservatives for paving the way for the anti-austerity movement.

Almunia, who was a minister under Felipe González from 1982-1991 then led the PSOE to an election defeat in 2000 against the Popular Party (PP), regrets that the Socialists — and social democrats across Europe — are “still licking our wounds.” Polls predict the PSOE could be relegated to third place in Sunday’s elections, behind the PP and the Podemos-United Left alliance.

The PSOE considered Almunia’s 34 percent in 2000 a humiliation and he resigned on election night. His successor Pedro Sánchez will be lucky to come within 10 points of that, which would confront the 137-year-old PSOE with three unappetizing choices: support Rajoy or someone else from the PP as prime minister; support Pablo Iglesias of Podemos as prime minister; or push for a third election — unthinkable in a country now facing the first repeat ballot in its modern democratic history.

The six-month stalemate resulting from December’s inconclusive elections could be prolonged if, as polls forecast, the vote doesn’t produce a clear outcome. To break another deadlock, Almunia rejects a German-style ‘grand coalition’ with the conservatives and Rajoy’s argument that the party with the most votes — i.e. the PP — should rule with a simple majority.

Spain, argues Almunia, has a parliamentary system and if there is no absolute majority the party with most support in Congress should govern — which would have made Sánchez prime minister after his deal with fourth-placed Ciudadanos in February.

“Spain has survived this period of political instability, but we can’t keep on playing with fire,” Almunia tells POLITICO.

However, he is clear that Podemos, which emerged two years ago from a wave of protest against austerity, graft and inequality, cannot be entrusted with government.

“I sincerely believe we can’t put the future of Spain in their hands at this stage,” he says.

Not that he is totally unsympathetic: Almunia credits Iglesias and other Podemos leaders with rejuvenating politics. But populism is better at pointing out problems than finding solutions, he says.

“Problems don’t disappear when you outline them or when you speak out against them; you need to solve them,” says Almunia.

Ideology overload

Almunia, who held two of the top jobs in Brussels — economic and monetary affairs commissioner from 2004-2010, then competition commissioner from 2010-2014 — knows a thing or two about radicalism. The PSOE of his youth was a clandestine Marxist organization of about 4,000 members and he wrote his undergraduate thesis on Marxist economics.

But in the six years from González taking over the party at a congress in France in 1974 to his election as prime minister, the PSOE went through a sharp learning process, agreeing a Constitution with the Franco regime’s remnants, running town halls and negotiating with factory owners on behalf of its affiliated trade unions.

“In 1982 we were very different from what we were in 1974,” says Almunia in an interview at Madrid’s Palace Hotel, where he, González and a crowd of young Socialists celebrated their first election victory in 1982. “We went through a reality shock.”

He detects an “excessive burden of ideology” in Podemos, whose policy ideas include hiking taxes and public spending, making full employment part of the European Central Bank’s remit, and getting more fiscal flexibility in the eurozone.

“Growth can’t be created with redistributive policies; growth makes redistributive polices possible,” says the 68-year-old Spaniard, who is now a visiting professor at the European Institute of the London School of Economics and Political Science.

Instead, it is the kind of unglamorous, incremental measures that he prescribed from the European Commission that will improve productivity and eliminate barriers to growth — though such things “aren’t on the populists’ agenda.”

Spain’s economy grew 3.2 percent last year but the country has the second-biggest budget deficit in Europe, of 5.1 percent, and faces sanctions from the Commission for missing its deficit goals. Almunia says the “foundations of growth are fragile” and blames the PP’s Mariano Rajoy, who is seeking a second term as prime minister after winning in December but without a clear majority, of failing to deliver a single meaningful reform in the past four years.

“We should have made more efforts to clean up public accounts when growth returned,” says Almunia.

According to him, the PP’s inequitable response to the crisis, and the corruption scandals within the ruling party, have undermined the credibility of the two parties and created a space for Podemos and Albert Rivera’s centrist Ciudadanos.

But Almunia also apportions blame to the Socialists’ own José Luis Rodríguez Zapatero, who as prime minister from 2004-2011 oversaw the immediate response to the financial crisis and Spain’s economic depression.

“The Zapatero government took some unavoidable decisions, but it didn’t dare to explain why those decisions had to be taken, how deep the crisis really was and why the policy leeway had evaporated,” says Almunia. It dodged ordinary people’s questions like “why the crisis is destroying millions of jobs, why it increases inequality, why you need to freeze certain spending or why you need to ask people to make sacrifices.”

Street-fighting man

Almunia says Spain should look to countries like Germany, which have succeeded in bring down high unemployment levels to a fraction of Spain’s 20 percent instead of criticizing  — as Iglesias has repeatedly done in the campaign  — the “Third Way” policies of center-left leaders like former German Social Democrat chancellor Gerhard Schröder or British Labour’s Tony Blair.

European social democrats, he says, should learn from their successes and apply “21st-century policies, not 19th-century ones.”

If Blair and Schröder’s legacies are to be questioned, he says, it would relate to the former British prime minister’s record on Iraq or the ex-chancellor’s post-political business dealings with Russia, rather than the reforms they carried out.

Almunia’s own legacy from his time as EU competition czar is closely bound to his attempt to settle an antitrust probe into Google for leveraging its dominance in Internet search.

“I think the one who regrets not having reached an agreement is Google,” says Almunia, whose successor Margrethe Vestager has charged Google with flouting antitrust rules. Almunia says the Danish commissioner has “earned a reputation as a serious, rigorous competition authority.”

Brussels-based competition lawyer Peter Alexiadis of Gibson Dunn remembers Almunia as “not a softly-spoken technocrat but a street-fighting politician who was interested in results above process.” The Spaniard made himself a hostage to fortune, however, by telling the world prematurely he had a deal with Google. “That wasn’t an isolated case of hubris on his part.”

“What was refreshing about him is that he did not seem to have inherited his predecessors’ fixation on ever higher fines” for companies, says Jean-François Bellis, an antitrust lawyer at Van Bael & Bellis.

The most imminent threat to the European project that Almunia now sees is this week’s U.K. referendum on EU membership: A vote for Brexit would be “a shock for the EU” and require serious thinking among committed Europeans like the Spanish.

“If they get off the train, we can neither stay in the station nor risk going backwards,” Almunia says. “We would need to think about how we can go forward together.”

Nicholas Hirst contributed to this article.